Uber's biggest potential competitor is over 100 years old

On a fourth-quarter and full-year 2015 earnings conference call
with analysts on Wednesday, before she uttered a single word
about a car or a truck, General Motors CEO Mary Barra talked
about leading "the transformation of personal
mobility."

GM was founded in 1908, at a time when over 24 million
horses and mules were still owned in the US. By 1960, that number
had plunged to 3 million — thanks largely to the Detroit auto
industry.

It goes without saying that with Uber and other highly
disruptive mobility services on the rise, valued at billions, GM
doesn't want to have done to it what it did to the
horse.

But can a company this old, building millions of cars and
trucks every year that are intended to be owned and driven by
individuals, really make the shift?

If you've watched the rocket-like ascent of Uber, now
valued at $68 billion, making it
worth more than GM and crosstown rival Ford (each with about
$45 billion in market cap), you might think that GM doesn't have
a prayer.

Barra does, and that's why she kicked off her first
earnings call of 2016 talking not about Chevys and Cadillacs, but
ride-sharing and electric cars (GM in January revealed its
$30,000 Bolt EV at the Consumer Electronics Show in Las
Vegas).

GM also recently invested $500 million in Uber rival Lyft,
at a $5.5 billion valuation.

Uber CEO Travis
KalanickChris Ratcliffe/Bloomberg via
Getty Images

Against Uber's daunting, unicorn value, that might look
like small potatoes. But there's a way it could be the start of
something big for GM — and Uber should pay attention.

If GM wants to jump into ride-sharing in a massive way, it
has two things that Uber doesn't: factories to build cars; and a
bank to loan people money to buy them with.

Uber is really a technology platform that facilitates
on-demand transportation. Its drivers are all contractors, and it
doesn't own any actual cars. This is very typical for a Silicon
Valley startup, where you can achieve a valuation in the billions
with a dozen employees, some laptops, rented server space, and an
app.

But of course Uber's drivers need cars. And Uber customers
like it best when these are nice, clean, relatively new cars.
This makes Uber, in the eyes of most, better than taxis and more
convenient than traditional "black car" limos. And if over the
next decade, a shift to autonomous cars takes place, Uber — if
it's still around — will need to provide that type of
vehicle.

This is where all the friction is in Uber's business model:
the technology is easy compared to growing a fleet of cars and
several armies of drivers.

GM, meanwhile, can easily build many, many cars. And more
importantly, because it has a captive financing arm, GM
Financial, it can come up with affordable ways for drivers to buy
or lease a vehicle. On the autonomous front, GM is an industry
leader; it's preparing to introduce a super-cruise feature on
Cadillacs that should function as well as Tesla's
Autopilot.

Our announcement with the strategic alliance with Lyft is very
significant because we believe, together, we can work and put
an autonomous fleet of sharing vehicles available for use
quicker than anyone else. We also believe in the short-term the
arrangement that we have of Lyft will allow us to capitalize on
providing and being a preferred provider for short-term-use
vehicles for Lyft drivers that will support not only General
Motors' performance, but also Lyft's performance.

It's hard to predict how this will all pan out. But it's clear
that Uber is the mobility provider that has the best shot at
becoming the Amazon or Apple or Google of transportation. Its
current competitors are valued at many billions less.

So it may take a really old company that just happens to be able
to do all the things that Uber can't, and that's also valued in
the tens of billions, to offer Uber its first real challenge.